X
X
Where did you hear about us?
The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

Homebuying Affordability Improves as House Price to Income Ratio Eases

Modest house price inflation, combined with strong wage growth, means buying a home is becoming more affordable relative to income, according to new research from Halifax.

The analysis – based on data from the Halifax House Price Index – compared typical house prices to average earnings across the UK.

House prices have increased by +3.8% compared to a year ago, reaching an average of £292,508. Meanwhile, annual earnings for full-time workers climbed by +5% to an average of £44,667, over the same period.

This means wage growth outpaced house price inflation, putting the house price to income ratio at 6.55. This is down from 6.62 last year, with the house price to earnings ratio gradually reducing since it reached a record high of 7.24 in the summer of 2022.

Impact of higher interest rates
While market activity has been improving – the number of new mortgages agreed recently reached its highest level in two years – residential property purchases are down by 33% compared to 2021, when interest rates were at a record low of 1.3% on average, compared to 4.1% in September this year.

A reduction in demand from buyers, from the highs of 2021, is one of the reasons house prices have remained flat for much of the last two years, with the average house price of £292,410 in 2022 compared to £292,508 in 2024. 

Want the full article?

subscribe